Clarification to deal with difference in ITC availed in FORM GSTR-3B

Goods and Services Tax (GST) is an indirect tax that replaced multiple indirect taxes in India. It is a destination-based tax that is levied on the supply of goods and services. GST is levied at each stage of the value chain, and the tax paid on purchases is available as Input Tax Credit (ITC) to the recipient.

The taxpayer is required to file monthly returns in Form GSTR-3B providing details of outward supplies, inward supplies, and GST liability. The ITC availed on purchases is also required to be reported in the Form. However, discrepancies may arise in the ITC availed, leading to differences between the ITC claimed and the actual amount eligible for credit.

Clarification on the difference in ITC availed

The Central Board of Indirect Taxes and Customs (CBIC) has issued a clarification on the difference in ITC availed in Form GSTR-3B. The following are the key points of the clarification:

1. Reporting of ITC in GSTR-3B

The amount of ITC availed in GSTR-3B should be the amount eligible for credit as per the provisions of the GST Act. The taxpayer should ensure that the ITC claimed in the return is in accordance with the provisions of the Act and the rules made thereunder.

2. Discrepancies in ITC availed

If there is any discrepancy in the ITC availed and the eligible amount, the taxpayer should identify the reasons for the discrepancy and take corrective action. The taxpayer should also ensure that the ITC claimed is supported by valid GST invoices, debit notes, and credit notes.

3. Reconciliation of ITC claimed and eligible amount

The taxpayer should reconcile the ITC claimed in the returns with the eligible amount on a regular basis. Any differences between the two should be identified and the reasons for the difference should be ascertained. The taxpayer should take corrective action to ensure that the ITC claimed is in accordance with the provisions of the Act and the rules made thereunder.

4. Time limit for availing ITC

The ITC on invoices issued during the financial year can be availed until the due date of furnishing the return for the month of September following the end of the financial year, or the date of filing of the annual return, whichever is earlier. The time limit for availing ITC on invoices issued in the previous financial year is the due date of filing the returns for the month of September following the end of the financial year.

5. Interest and penalty on excess ITC claimed

If the taxpayer claims excess ITC in the returns, interest and penalty may be levied as per the provisions of the GST Act. The taxpayer should take all necessary precautions to ensure that the ITC claimed in the returns is accurate and in accordance with the provisions of the Act and the rules made thereunder.

6. Rectification of errors in ITC claimed

If the taxpayer identifies any errors in the ITC claimed in the returns, they should rectify the same in the subsequent returns. The taxpayer should also ensure that the errors are identified and rectified within the time limit prescribed under the GST Act.

Conclusion

The clarification issued by the CBIC on the difference in ITC availed in Form GSTR-3B provides guidance to the taxpayers on the correct procedure to be followed while claiming ITC in the returns. The taxpayers should ensure that the ITC claimed is accurate and in accordance with the provisions of the Act and the rules made thereunder to avoid any interest and penalties.